In President's Budget Plan, Broad Agenda and a Few Gaps

President Obama after meeting with, from left, National Economic Council Director Lawrence H. Summers, Sen. Christopher J. Dodd (D-Conn.), Treasury Secretary Timothy F. Geithner and Sen. Richard C. Shelby (R-Ala.). (By Bill O'leary -- The Washington Post)
Buy Photo

The deficit is perhaps the trickiest issue in Obama's spending plan. He has pledged to cut it in half by the end of his first term. Specifically, administration officials say the annual gap between federal spending and tax collections will fall from something north of $1.4 trillion this year -- the highest since World War II -- to $533 billion in 2013.

But Republicans and some budget analysts noted that this highly touted goal is not particularly ambitious: This year's budget deficit is bloated by spending on the stimulus package and various financial-sector bailouts, expenses unlikely to be repeated in future years. The nonpartisan Congressional Budget Office recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama has proposed. That alone would cut the deficit to $715 billion, according to the CBO.

"It's easy to cut the deficit in half after you've quadrupled it," said Brian Riedl, a budget analyst at the conservative Heritage Foundation. "The end of the recession, the drawdown of Iraq spending and the end of temporary stimulus spending will by itself cut the deficit in half. He should do more."

More concerning to critics are Obama's claims to have identified big spending reductions. In his speech to Congress on Tuesday, Obama pledged an end to "education programs that don't work," "direct payments to large agribusinesses," "no-bid contracts" in Iraq and "Cold War-era weapons systems we don't use."

But a senior administration official acknowledged yesterday that the budget does not contain $2 trillion in spending cuts over the next decade. Instead, the figure represents Obama's total efforts at deficit reduction, including tax hikes on families making over $250,000 a year. It also includes hundreds of billions of dollars "saved" by not continuing to spend $170 billion a year in Iraq.

The official defended the administration's figures, saying they accurately represent recent war costs. "It's a change in our policy that is going to bring those costs down," the official said.

But several budget analysts criticized the speech as misleading.

"It's a hollow number," said Sen. Judd Gregg (R-N.H.), the senior Republican on the Senate Budget Committee, who recently withdrew as Obama's nominee to head the Commerce Department. "You're not getting savings if you're assuming spending that isn't actually going to occur."